Key Stats for FDS Stock
- 3 Months Price change for FDS stock: -29%
- $FDS Share Price as of Feb. 20: $195
- 52-Week High: $475
- $FDS Stock Price Target: $311
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What Happened?
FactSet Research Systems (FDS) stock has tumbled to multiyear lows, with shares down over 30% in the past month alone and more than 54% over the past year. The financial data and analytics provider is facing a crisis of investor confidence despite posting solid underlying profitability.
- The company recently reported second-quarter fiscal 2025 results showing organic annual subscription value (ASV) growth of just 4.1% year over year.
- While management reaffirmed its full-year guidance midpoint of 5% ASV growth, the slow start to the fiscal year has raised questions about whether growth is truly accelerating.
- Several headwinds are weighing on the business. Lower consumer price inflation reduced FactSet’s annual price increase, which hurt ASV growth by nearly $7 million in the quarter compared to last year.
- The company also faces ongoing pressure from cost-cutting initiatives at asset management clients, as they deal with outflows from active strategies to passive funds.
- Perhaps most concerning, the institutional buy-side segment continues to struggle. FactSet reported that headwinds from cost rationalization and budget tightening persisted among asset managers and asset owners.
- The company even proactively retired a legacy solution during the quarter, resulting in a seven-figure cancellation that further pressured growth.
CEO Phil Snow acknowledged the challenging environment. He pointed to increased scrutiny, elevated deal approval requirements, and extended buying cycles as persistent challenges.
The banking segment also remains weak despite FactSet launching new AI-powered products, such as Pitch Creator.
While management expressed confidence in the quality of its banking offerings, the company is not relying on a banking recovery to hit its full-year targets.
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What the Market Is Telling Us About FDS Stock
The dramatic decline in FactSet Research Systems stock suggests investors are questioning whether the company can return to its historical mid-to-high single-digit growth rates in this environment.
Despite management’s optimistic tone about second-half acceleration, the market appears skeptical.
There are some positive signs worth noting. The wealth management segment returned to double-digit growth, with FactSet winning a major contract to power UBS adviser desktops in the Americas.
This win means FactSet now serves half of the world’s top 20 wealth management firms, demonstrating competitive strength in that vertical.
- The company is also making progress with its generative AI offerings. Management reported strong traction with Pitch Creator for investment bankers, conversational AI APIs, and portfolio commentary tools.
- FactSet has now monetized six different AI products and remains on track to generate 30 to 50 basis points of growth from AI this year.
- Recent acquisitions like LiquidityBook and Irwin are opening new cross-selling opportunities.
- LiquidityBook in particular fills a gap in FactSet’s front-office trading workflow, potentially making the company more competitive for hedge fund clients seeking an integrated order management system.
- Management also emphasized that it has “derisked all of the big rocks for the year,” meaning most major client renewals have been secured.
- Banking renewals in particular came through better than expected, with pricing either flat or up in aggregate.
Despite these positives, FactSet Research Systems stock continues to trade near multiyear lows. At the current price of $195, some analysts see the stock as undervalued with a narrative fair value around $314.
However, that valuation depends on FactSet successfully defending against AI-driven disruption to traditional data terminals and converting acquisitions into meaningful recurring revenue.
The key question for investors is whether current growth challenges are temporary or structural. FactSet has historically been resilient through market cycles, but the combination of passive investing pressure, AI disruption concerns, and cautious client spending creates a more complex risk environment.
For fiscal 2026, the company is projecting organic ASV growth to accelerate in the second half. Management narrowed its full-year ASV growth guidance range to $100 million to $130 million, representing 4.4% to 5.8% growth.
If that acceleration materializes, it could help stabilize sentiment around the stock.
Investors should monitor several key metrics in the coming quarters: ASV growth trends by client segment, traction with AI products, retention rates outside of volatile segments like banking, and whether pricing pressure from lower inflation moderates.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
